2nd. Canvas Model • How to apply it to your Business
Canvas Model • How to apply it to your Business
When you have a business idea, before putting it into practice, the first thing we must do is build a model that is useful to analyze the company that we intend to make a reality, in order to know if it is viable and evaluate its profitability. Something that can also be of importance if you have a company already operating. Traditionally, this has been a complex task that demands a lot of time and effort.
In 2008 the Swiss Alexander Osterwalder published the book Business Model Generation based on his Doctoral Thesis work on Business Model Canvas, or simply Canvas Model. The method created by Osterwalder allows build a business model quickly and easily.
The intention is help speed up the development of business initiatives, something that is very useful to face the changing dynamics that we find today in the different scenarios of globalized markets. Currently, this method has become a widely used tool to design the projects of new companies, as well as as an input for the management of established companies.
What is the canvas model and what is it for?
Basically it is a business management methodology that proposes to describe a business model covering four areas that are considered as priorities: the clients, the offer, infrastructure and economic viability.
Its purpose is to explain quickly and easily, by using a graphical representation, how is the logic that a business follows to generate income and obtain profitability.
The canvas model proposes a structure based on nine basic modules, arranged and interconnected as shown in figure 1. Each of these modules defines a specific characteristic of the business.
The canvas is organized around the value proposition, placed in the central part of the scheme. In the area on the right are the blocks associated with entities or actions outside the company. In this way, it is established that the proposal is sent to the customer segments with whom we will establish relationships., through certain channels, for the purpose of generating income.
In the area on the left we have the blocks associated with elements and internal operations of the company. So to make the value proposition tangible, with the participation and assistance of the partners, we must carry out a set of activities with the support and use of key resources. The above determines the cost structure and ultimately this is the investment needed to sustain the business.
How to make a canvas model?
To make a canvas model, the first thing you should do is print the canvas. (canvas) with the nine modules that make it up, in a suitable size so that the information to be placed in each box is legible.
Then you have to proceed to fill it in following the instructions and the order that we specify below:
Value proposal: It is the module on which the business idea is centered, This highlights what it has to offer and what is of interest or use to customers. It is important to point out what makes us different from the rest, establish what the competitive advantages are and to what extent it serves to satisfy customer needs.
Customer Segments: Clients represent each and every one of the business opportunities towards which to direct our value proposition. They can be people or companies, grouped into segments that share some characteristic in common, which we must strive to identify; for instance: age, taste or need.
Channels: They are made up of different media, direct or indirect, through which we communicate or interact with customer segments. These channels represent a fundamental resource and must be effective, rapid, efficient and profitable, both to publicize the value proposition and for its subsequent distribution and sale.
Relationship with Clients: We must define the best ways and strategies to interact with customers, in a manner consistent with the segment to which the value proposition is directed, considering the available channels. This is what will ultimately establish the image and prestige of the business, something very important to attract, attract and retain customers.
Source of Income: This represents the money that is intended to be generated, something that will be useful to quantify and evaluate your profitability. For this purpose, it is very important to assess how much money customers would be willing to pay for our products or services, as well as the frequency and other characteristics of the payments; for instance: cash or credit.
Key Resources: They are the means you need to have to make your value proposition come true. These can be human resources, economic, physical and intellectual; for instance: a local, personal, machinery or patents. These needs are what largely determine the investment required to make the business viable and maintain..
Key Activities: Within the set of all the activities to be carried out, These are the ones that provide the greatest value and are essential for the business to function. They are mainly related to the production areas, sales and support. Defining them will allow you to be clear about the type of company to which you will dedicate yourself, where to focus and how to enhance it.
Key Partners: They are alliances that we need either to specify the model or to strengthen it.. It is a factor of great importance today, which in most cases determines the profitability of the same, as a consequence of the competition that manifests itself in a globalized market.
Cost Structure: Definitely, It serves to know the money that we must invest for the operation of the company. It is mainly focused on quantifying the costs of resources and activities, to later try to minimize them. Proper and precise handling of this line will allow us to improve the profitability of our business model.
How to apply this model to your business?
The Canvas Model can be used in all types of business, it is adaptable to any business strategy, so we invite you to apply it in your company. Next, we give you instructions on how to proceed:
The first thing is to develop the Canvas Model of your business idea. For this, we suggest you refer to the previous sections of this article and especially the line on ¿How to make a canvas model?, following the respective links to obtain more details about each of the modules and receive guidance that will help you generate the necessary information.
Once the canvas is completed you will have in view all the elements that make up the business, what allows understand clearly and concisely the relationship between offer, customers, infrastructure and profitability. Already in this instance it is possible to validate the viability.
Then you can evaluate the business idea by carrying out analysis and contrasting each of the 9 modules with the reality of the market. Depending on the results, carries out the rigorous changes in the elements of the model in order to optimize its profitability, maintaining viability.
Finally, creates and organizes plans or strategies to promote actions that make these changes a reality in the respective company processes.
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